Frontrunning: September 17
- Less Tapering Becomes Tightening Credit No Matter What Fed Says (BBG)
- Yellen Is Now Top Fed Hopeful (WSJ)
- Syria - A chemical crime, a complex reaction (Reuters)
- More ECB collateral: Wrecked cruise ship Costa Concordia raised off rocks in Italy (Reuters)
- Aging Boomers Befuddle Marketers Eying $15 Trillion Prize (BBG)
- Abe Turns Pitchman, Says Japan Is Now A Buy (WSJ)
- Ex-JPMorgan Employees Indicted Over $6.2 Billion Loss (BBG)
- Barack Obama blinked first in battle for Lawrence Summers (FT)
- Berlusconi to support Italian government in video message: sources (Reuters)
- How China Lost Its Mojo: One Town's Story (WSJ)
- Citigroup must pay couple $3.1 million for not overseeing broker (Reuters)
- Researcher Puts China's Local Government Debt at $3.3 Trillion (WSJ)
- Ex-Soviet Programmers Take On India in $48 Billion Market (BBG)
- Goldman Names New Tech Chief (WSJ)
Overnight Media Digest
* Fed Vice Chairwoman Janet Yellen emerged as the front-runner to become President Obama's nominee to lead the central bank after Lawrence Summers pulled out of the contest. President Barack Obama hasn't made a final decision, a senior administration official said. The process for selecting a nominee isn't starting over, senior administration officials said Monday, and no new candidates have been added to the mix.
* The White House and its allies said a U.N. report on last month's chemical attack in Syria added evidence to their view that regime forces fired sarin filled rockets.
* JPMorgan Chase is expected to take a big step toward resolving the "London whale" trading fiasco, agreeing to pay at least $800 million in penalties and admit wrongdoing as part of a broad regulatory settlement over its handling of the matter.
* Natural gas drillers aren't leaking as much of a greenhouse gas as the federal government has estimated, according to a new study by researchers at the University of Texas.
* The chief executive of LPL Financial created a self-imposed rule: He must respond to any email from one of the firm's 13,400 financial advisers within two hours, even on weekends and holidays. It is one piece of a much larger effort Casady is making to redeem LPL after a rocky few years that were capped in May by a $7.5 million fine levied on the firm by regulators who cited "systemic" failures in its email system tied to mismanaged growth, the largest-ever such fine.
* Investors are increasing the pressure on Barrick Gold to shake up its board and quicken founder Peter Munk's exit from the world's largest gold miner, according to people familiar with the matter.
* Goldman Sachs Group Inc picked equities executive R. Martin Chavez as its new chief information officer, a month after a software glitch sent waves of errant orders into the stock-options market, roiling prices at exchanges and triggering an internal review.
* Pandora Media said it plans to offer 10 million shares and that a stakeholder would offer an additional four million shares.
* Bombardier's CSeries jet made its maiden flight on Monday, a major milestone in the Canadian company's bid to take on giants Boeing and Airbus in the market for small passenger jets.
* Kennametal agreed to buy Allegheny Technologies' tungsten business for $605 million, a deal that sheds light on an obscure but important part of the metals business. The two western Pennsylvania companies buy scrap and other raw materials and process them into powder coatings, alloys and tools used by manufacturers of everything from mining drills to airplanes.
JPMorgan Chase is in talks with securities and bank regulators to settle investigations into its $6 billion London Whale trading loss, expecting to pay about $800 million, people familiar with the matter said.
Barclays said it was contesting a British watchdog's 50 million pound ($79.68 million) fine for behaving "recklessly" when it failed to disclose 322 million pounds worth payments to Qatari investors during its emergency cash call in 2008.
Britain's Vodafone is about to go face-to-face with hedge funds over the mobile network's buyout of minority investors in Kabel Deutschland, having only narrowly secured the approval from three-quarters of shareholders needed for the 7.7 billion euro ($10.28 billion) deal.
Britain's accounting watchdog has launched a probe into whether PriceWaterhouseCoopers was acting independently when it audited the books of housebuilder Berkeley Group last year.
Danske Bank ousted Eivind Kolding after his 18-month stint as the chief executive of Denmark's biggest bank - his tenure there saw a fierce clash with the Danish regulator, a marketing campaign that ended in a public apology, and the loss of tens of thousands of customers.
* Janet Yellen told friends in recent weeks that she did not expect to be nominated as the next chairman of the Federal Reserve. Now, awkwardly, it appears that President Obama may have to circle back to Yellen after Lawrence Summers withdrew from consideration on Sunday, bowing to the determined opposition of at least five Senate Democrats. On Monday, Yellen became the front-runner by elimination, officials close to the White House said.
* JPMorgan Chase & Co has agreed to pay about $800 million to a host of government agencies in Washington and London - and make a groundbreaking admission of wrongdoing - to settle allegations stemming from a multibillion-dollar trading loss, people briefed on the matter said.
* American farmers are getting an unexpected windfall from a contentious fight between Russia and Belarus, a former Soviet splinter state. The subject of the fight is potash, a fertilizer. The score so far: One imprisoned Russian business executive, the disintegration of a once-effective cartel that kept world potash prices high and political tension between the two countries.
* Citing concerns about drug quality, the U.S. Food and Drug Administration on Monday announced a ban on imports of any products made at the generic drug maker Ranbaxy Laboratories Ltd's newest factory in India. The move is the third time Ranbaxy imports have been blocked in the United States since 2008.
* The British government announced on Monday that it was selling part of its stake in Lloyds Banking Group Plc. The decision to sell 6 percent of the bank's shares comes five years after Lloyds received a multibillion-pound bailout from taxpayers and is an effort to take advantage of the firm's improving fortunes since the financial crisis.
* Factory output surged in August as the pace of motor vehicle production jumped to a six-year high, a hopeful sign for the economy after a slow start to the third quarter. Although another report on Monday showed a slight slowdown in factory activity in New York State this month, new orders and shipments in the state rose, all pointing to an increase in manufacturing after weakening in the spring.
* Morgan Creek Capital Management has started a mutual fund, offering individual investors a chance to invest as they would in a hedge fund. The new fund, called the Tactical Allocation Fund, will allow average stock and bond investors to get a taste of the exclusive world of hedge funds, traditionally reserved for pension funds, charities, big institutions and the ultra wealthy.
* Spain is on track to meet the 2013 budget deficit target it agreed on with its European Union partners and should emerge from recession before the end of the year, the country's economy minister said on Monday. The minister, Luis de Guindos, also said the government would not require additional one-time austerity measures as part of the 2014 budget that it will present this month.
* Two years after Chipotle Mexican Grill Inc introduced to widespread acclaim an animated commercial with a pointed message about sustainable farming, the company is back with another animated spot on the subject of food production. The new commercial takes swipes at giant companies that treat food like another product to process and contrasts that with food made in sustainable ways that is fresh and wholesome.
THE GLOBE AND MAIL
* The Quebec Liberal Party has confirmed anti-corruption investigators raided party headquarters this summer while the province's attention was riveted on a succession of resignations and arrests of big-city mayors.
* As many as two Coast Guard icebreakers may be dispatched to the site of a deadly helicopter crash in the remote western Arctic to hunt for answers hundreds of meters below the surface of the Northwest Passage. The Canadian government is still reviewing options before green-lighting a trip but advance planning is already under way that could send the Amundsen and Henry Larsen to the spot, about 670 kilometers west of Resolute, Nunavut, where three died on Sept. 9 in a tragedy that has shaken Arctic researchers.
Reports in the business section:
* Wind Mobile plans to participate in the auction of Canadian wireless spectrum, making it the first new-entrant carrier to confirm its intentions to bid. Chief Executive Anthony Lacavera gave that confirmation on Monday, ending speculation about whether the startup carrier would compete in the auction of the 700-megahertz frequency. Carriers face a Tuesday deadline to file their applications and put down a 5 percent deposit to secure a place in the auction.
* Betting that consumers are willing to pay for instant gratification, Canada Post is teaming up with Wal-Mart Canada Corp, Best Buy Canada Ltd, and Indigo Books & Music Inc in the first major Canadian rollout of same-day online shopping.
* With the maiden flight of the C Series, Bombardier Inc has officially ascended into commercial airspace ferociously guarded by industry giants Airbus SAS and Boeing Co . About 2,700 employees and 300 Bombardier guests cheered loudly as the plane took off from a Mirabel runway for a 2-1/2-hour flight over the Lower Laurentians.
* Canada's prime minister, Stephen Harper, spoke out against Quebec's controversial proposed Charter of Values on Monday, saying he doesn't expect the current proposal to pass the province's legislature, but said the federal government will "take whatever action is necessary" if it does.
* The Aeroplan credit card business is one of the crown jewels of Canadian banking, and Toronto-Dominion Bank could have had the whole thing to itself, but chief executive Ed Clark said that at the end of the day it was smarter to split the prize with rival Canadian Imperial Bank of Commerce. "In a sense, we get the best of both worlds," Clark said in a telephone interview on Monday.
CHINA SECURITIES JOURNAL
- China may introduce property trusts this year, giving developers a much needed new source of funding. The move could come as part of a government change of tack to ease tight monetary policies, the paper said, citing industry sources.
CHINA BUSINESS NEWS
- Bankruptcy proceedings for China's Suntech Power Holdings' Wuxi unit will likely be delayed by three months to the end of December as the company and creditors have yet to submit a plan to restructure its debt obligations, the paper said, citing unidentified court officials.
SHANGHAI SECURITIES NEWS
- Chinese banks may be locked out from participating in the government bond futures market for the first year, according to industry insiders. The market launched in early September for the first time after a trading scandal caused the government to shut it 18 years ago.
- The Zhabei District government urged people to call a hotline and report instances of government cars being used for private purposes, in a bid to halt abuse of privileges, an official said on Monday. Official vehicles will be marked to identify them.
- China's publishing associations should assist the Central Propaganda Department's bid to strengthen the management of children's publishing, according to an editorial in the paper which acts as the government's mouthpiece. Currently, children's publications have vulgar content and are of poor quality.
Fly On The Wall 7:00AM Market Snapshot
American States Water (AWR) upgraded to Buy from Hold at Brean Capital
Apache (APA) upgraded to Outperform from Perform at Oppenheimer
Avago (AVGO) upgraded to Outperform from Market Perform at JMP Securities
BB&T (BBT) upgraded to Buy from Neutral at Goldman
Banco de Chile (BCH) upgraded to Buy from Hold at Deutsche Bank
Broadcom (BRCM) upgraded to Positive from Neutral at Susquehanna
Chico's FAS (CHS) upgraded to Buy from Hold at KeyBanc
Church & Dwight (CHD) upgraded to Buy from Hold at Deutsche Bank
Comerica (CMA) upgraded to Neutral from Sell at Goldman
Delta Air Lines (DAL) upgraded to Overweight from Neutral at JPMorgan
Deutsche Bank (DB) upgraded to Buy from Neutral at UBS
Guidance Software (GUID) upgraded to Hold from Sell at Benchmark Co.
Mead Johnson (MJN) upgraded to Overweight from Neutral at JPMorgan
PSEG (PEG) upgraded to Buy from Hold at Jefferies
Santander Chile (BSAC) upgraded to Buy from Hold at Deutsche Bank
US Airways (LCC) upgraded to Overweight from Neutral at JPMorgan
Umpqua Holdings (UMPQ) upgraded to Neutral from Underperform at Credit Suisse
Verizon (VZ) upgraded to Outperform from Sector Perform at RBC Capital
Volcano (VOLC) upgraded to Outperform from Market Perform at BMO Capital
BRE Properties (BRE) downgraded to Sell from Neutral at Goldman
Big 5 Sporting (BGFV) downgraded to Neutral from Overweight at Piper Jaffray
Boise (BZ) downgraded to Neutral from Buy at Longbow
ConAgra (CAG) downgraded to Neutral from Overweight at JPMorgan
EverBank Financial (EVER) downgraded to Neutral from Buy at Goldman
Extra Space Storage (EXR) downgraded to Buy from Conviction Buy at Goldman
Fifth Third Bancorp (FITB) downgraded to Neutral from Buy at Goldman
IAC (IACI) downgraded to Sector Perform from Outperform at RBC Capital
Kellogg (K) downgraded to Underweight from Neutral at JPMorgan
Kennametal (KMT) downgraded to Neutral from Buy at BofA/Merrill
National Bank (NBHC) downgraded to Sell from Buy at Goldman
Werner (WERN) downgraded to Hold from Buy at KeyBanc
Werner (WERN) downgraded to Neutral from Buy at BofA/Merrill
Werner (WERN) downgraded to Sector Perform from Outperform at RBC Capital
3D Systems (DDD) initiated with an Outperform at Credit Suisse
ARMOUR Residential (ARR) initiated with a Buy at MLV & Co.
Albany International (AIN) initiated with a Buy at DA Davidson
Amarin (AMRN) initiated with a Neutral at Goldman
Auxilium (AUXL) initiated with a Buy at Goldman
Charles River Labs (CRL) initiated with a Neutral at UBS
Covance (CVD) initiated with a Buy at UBS
Dynex Capital (DX) initiated with a Buy at MLV & Co.
Endo Health (ENDP) initiated with a Buy at Goldman
Envision Healthcare (EVHC) initiated with an Overweight at Piper Jaffray
ExOne (XONE) initiated with an Underperform at Credit Suisse
Franklin Covey (FC) initiated with a Buy at B. Riley
Hatteras Financial (HTS) initiated with a Buy at MLV & Co.
ICON plc (ICLR) initiated with a Buy at UBS
Ironwood (IRWD) initiated with a Sell at Goldman
Jazz Pharmaceuticals (JAZZ) initiated with a Buy at Goldman
Kythera (KYTH) initiated with a Neutral at Goldman
MGIC Investment (MTG) initiated with a Market Perform at JMP Securities
Mallinckrodt (MNK) initiated with a Neutral at Goldman
PAREXEL (PRXL) initiated with a Buy at UBS
PerkinElmer (PKI) initiated with an Overweight at Piper Jaffray
Perrigo (PRGO) initiated with a Buy at CRT Capital
Questcor (QCOR) initiated with a Neutral at Goldman
Quintiles (Q) initiated with a Buy at UBS
Radian Group (RDN) initiated with an Outperform at JMP Securities
Rally Software (RALY) initiated with a Buy at Wunderlich
Salix (SLXP) initiated with a Neutral at Goldman
Stratasys (SSYS) initiated with a Neutral at Credit Suisse
Valeant (VRX) initiated with a Conviction Buy at Goldman
Huntsman (HUN) to acquire Rockwood (ROC) for $1.1B plus pension liabilities
Synergy Resources (SYRG) said majority of existing production unaffected by Colorado floods
Philips (PHG) announced new buyback program of EUR 1.5B
James River Coal (JRCC) idled production, furloughed 525 employees
Outerwall (OUTR) lowered FY13 EPS view to $4.72-$5.12 from $5.76-$6.26, consensus $5.91; lowered FY13 core adj EBITDA view to $451M-$471M from $507M-$538M
Companies that beat consensus earnings expectations last night and today include:
Coty (COTY), Student Transportation (STB), Oclaro (OCLR)
Companies that matched consensus earnings expectations include:
- The largest U.S. banks (JPM, BAC, C, GS) say they would be able to weather a severe economic crisis with higher capital levels than previously estimated, bolstering the notion that financial institutions have made headway in their quest to minimize risk and shore up their balance sheets, the Wall Street Journal reports
- An early forecast predicts the holiday-shopping season will be the worst since 2009, mirroring the concerns of some retailers who are stepping up discounts and pushing earlier for what they fear will be hard-fought sales, according to ShopperTrak, the Wall Street Journal reports
- Natural-gas drilling sites aren't leaking as much methane into the atmosphere as the federal government and critics of hydraulic fracturing had believed, according to the first study of emissions at multiple drilling sites, led by researchers at the University of Texas at Austin and published by the Proceedings of the National Academy of Sciences, the Wall Street Journal reports
- The U.K. will consider offering shares to private retail investors when it offloads more of its stake in Lloyds Banking Group (LYG), said Finance Minister George Osborne, Reuters reports
- Total (TOT) is in talks to join "tight" or hard to access oil projects in Russia, which by some estimates hold the world's largest unconventional oil reserves, Reuters reports
- Fed Vice Chairman Janet Yellen is President Obama’s top candidate to lead the central bank even after her supporters helped force his initial favorite to withdraw, sources say, Bloomberg reports
Chef's Warehouse (CHEF) files to sell 3.3M common shares
EPAM Systems (EPAM) files to sell 1.125M shares for stockholders
JinkoSolar (JKS) files to sell 3.5M American Depositary Shares
Pandora (P) files to sell 14M shares of common stock
SB Financial (SBFG) files to sell $30M of common, preferred stock
Shutterstock (SSTK) files to sell 3M shares, including 2M for holders
Textura (TXTR) amends share offering to 4.59M shares from 4M shares
Sycamore Partners reports 7.96% stake in Aeropostale (ARO)
Biglari says Cracker Barrel (CBRL) should declare $20/share special dividend